Persimmon profits top £1 billion

26 Feb House-builder Persimmon, under fire in recent times for its generous executive pay packages, made a pre-tax profit of more than £1bn last year.

In the year to 31st December 2018, Persimmon increased revenues by 4% to £3,737.6m (2017: £3,597.8m) and profit before tax by 13% to £1,090.8m (2017: £966.1m).

Persimmon sold 16,449 new homes in 2018 (2017: 16,043) and an average selling price up 1% to £215,563 (2017: £213,321).

During the year, new housing gross margins increased to 33.3% (2017: 31.3%).

Persimmon now has 31 individual regional house-building businesses within the group, with the latest opening near Doncaster at the start of 2019 – its seventh new operating business in four years.

On the basis of this performance, Persimmon decided against bringing in an outsider to replace Jeff Fairburn as chief executive and instead give the post to group managing director Dave Jenkinson, who has been acting as interim CEO since the start of the year.

Chairman Roger Devlin said: "Persimmon is changing. In his short time as interim CEO Dave Jenkinson has introduced new approaches to customer satisfaction and colleague engagement, whilst also ensuring that the group delivered another year of growth. These changes are illustrative of wider efforts across the group to evolve our processes and practices to pursue excellence across all aspects of our business. Achieving further progress with these initiatives will be a key priority for Dave in his new post as CEO."

Commenting on the results, Arlene Ewing, investment manager at Brewin Dolphin Scotland, said: “It’s another strong set of results from Persimmon, with legal completion volumes increasing, group revenue up 4%, and profits exceeding £1 billion. Margins have also increased – however, in the build up to these results, there had been questions over whether this was achieved at the expense of home quality and customer service. The company has taken some measures to mitigate that with a series of customer care and employee initiatives. Forward sales have stagnated, which is perhaps a reflection of the uncertainty hanging over the market. Nevertheless, Persimmon continues to offer some of the highest returns in the sector and remains the blue-chip option among housebuilders.”